The Most Important Self-Storage Number No One Could Measure - Until Now

THE SELF STORAGE REPORT — FULL TRANSCRIPT Episode: "The Most Important Self-Storage Number No One Could Measure — Until Now" (bullish or bearish on self-storage; measuring demand) Format: Solo — Chris Berg (Abernathey Development, "The AI Storage Guy") Topic: Why demand — not supply — is the unmeasured variable in self-storage, and the full methodology behind the Storage Demand Score. Frames the industry's headwinds (people locked in 3% mortgages; record emigration / collapsing border apprehensions; falling U.S. fertility rate since 2007) alongside long-term tailwinds (smaller new homes, rising utilization, small-business demand). Walks through the Storage Demand Score formula end to end with a live Pasadena example. Key references / clips: Sam Zell ("supply and demand" at Univ. of Michigan); Brett Henry (Trojan Storage) — "you can't create demand" clip; Liz Raun Schlesinger (Merit Hill Capital) and Ben Vestel (Argus) from an Argus webinar; a WSJ piece on record U.S. emigration (first time since 1935); a Bloomberg piece on Frisco, TX-area home prices down ~9%; "Mr. Cohn," a 38-yr Pittsburgh operator, on requiring a 3x demand cushion before building; Public Storage 2026 mid-year outlook (storage utilization ~doubled in 20 yrs). Research done via Claude Deep Research. The formula: Demand = Households × 12.6% (SSA usage rate) × 125 sq ft (avg household usage). Then (Total Demand − Total Supply incl. pipeline) ÷ Proposed Net Rentable SF = the score. Target ≥ 3x as a margin of safety. Data powered by TractIQ. Recorded: ~June 2026 Source: original recording transcript (solo; lightly cleaned for readability) ======================================================== Chris Berg: Today on the Self Storage Report, we're going to talk about whether you should be bullish or bearish right now on self-storage — looking at some of the headwinds in the industry — plus something really unique about self-storage that doesn't get talked about enough and has never been measured before, until today. I'll show you how we're now measuring that. Welcome to the Self Storage Report. I'm Chris Berg, head of business development for Abernathey Development. If you've got land in California or Arizona you think might work for self-storage, hit me up and we'll take a look. And subscribe to the channel so you're the first to know as we put out this content. I want to start with a simple story as we dive into the data and this unique aspect of self-storage — and it's about Sam Zell. If you don't know Sam Zell, he passed away recently — an incredible real estate and business investor. He tells the story of walking into his intro-to-econ class at the University of Michigan, and on the board, in big bold letters, it said: SUPPLY AND DEMAND. That stuck with him, because it was the basic principle he'd use when investing in a piece of real estate or a business. And in self-storage, everybody talks about supply — very few talk about demand. Until today, we've never had a formulaic way to measure demand. If you can't measure demand, you're going to see some poor choices when it comes to making investments — which is exactly what's happening right now. I was recently on a great webinar thanks to Argus and Ben Vestel — I'll play a couple clips shortly. They were saying it's shocking that people are still building in areas with so much supply and not enough people for demand. So you've got to ask: what is demand? How do you measure it? If it's so important to someone like Sam Zell, it should be important to us. Measuring supply is super simple in this business. Measuring demand, up until today, has not been formulaic — and we'll give you that metric later. Demand in this industry is really people. But the unique thing not a lot of people talk about is that it's not like an iPhone. Apple can say "the iPhone 20 is coming out" and suddenly there are lines of people waiting for it — maybe it added a couple pixels on the camera. In self-storage, you cannot create demand. Don't take my word for it — here's a clip from Brett Henry of Trojan Storage, incredibly successful, with a billion-dollar portfolio. He was on the pod recently, and here's what he said about demand and self-storage. [Clip: Brett Henry on you can't create demand] Chris Berg: That is the key element. In this industry, you cannot create demand. To reiterate — this week Ben Vestel from Argus had a phenomenal webinar. One guest was Liz Raun Schlesinger, who runs Merit Hill Capital and owns hundreds of self-storage assets. Here's what she had to say. [Clip: Liz Raun Schlesinger on demand] Chris Berg: So there you have it. You cannot create demand in this industry, and yet many people are putting assets in places that have no business being developed. That's a conversation for another day — about incentives for developers. Even within this webinar, some suggested you might see developers who are really just solving for their development fee and not concerned about the performance of the asset. That's a very bad incentive, and it's starting to bear out in the industry. So let me share some headwinds to be aware of if you're thinking about buying or developing assets, so you can think about demand from a new perspective. Here's Ben Vestel from the webinar, setting the stage — because I saw a stunning stat in the Wall Street Journal this week that I'll share after this clip. This is all in the context of: how do we have a good way of measuring demand to ensure that if we're going to put $20, $30, $40 million in the ground, there's an actual need for that product? [Clip: Ben Vestel on population growth as the demand driver] Chris Berg: Very well said — population growth is the key driver of demand in self-storage. Earlier this week I saw a Wall Street Journal article: "Americans are leaving the U.S. in record numbers." Shocking data — for the first time since 1935, this nation known for immigration is becoming a country of emigration, with more people leaving than coming in. That article sent me down a research rabbit hole (all done by Claude Deep Research — very robust if you haven't used it). Here's a piece I've been talking about since the New York SSA that I don't think gets enough attention. Net international migration to the United States: from 2020 to 2024-2025, we had a record number of people coming to the border — border apprehensions (just the people we know about). Population is demand, or population growth is demand, for self-storage. These numbers growing is good news if you're in a border state — Southern California, Arizona, Texas, even Florida. But since the peak in 2024, the 2026 projection is an 88% drop in people apprehended at the border. Add it up and it's roughly 6 million people over three years — that's a big city. When it drops off this precipitously (how's that for a good SAT word), I think that has an impact. Border Patrol apprehensions are projected to hit their lowest level since 1970 in 2026. Also — demography is destiny. U.S. total fertility rate: the replacement line is what we need just to replace our current population, and we've been dropping below it since 2007. I lead a men's group every Wednesday night, and last night a gentleman — with no idea I'd be talking about this today — asked, "Does anybody know when the fertility rate really started to dip?" I said 2007. Do you know what was released in 2007? The iPhone. Is that causation? I don't know. Is there correlation? Yes. A whole other rabbit hole for another day, but fascinating. Back to migration: I found a Bloomberg piece on the impact immigration policy can have on different areas. Think supply and demand — when you lower demand and bump up supply, that drives down prices. This was about Frisco, Texas, just north of Dallas. Texas — Dallas, Austin, Houston — has grown dramatically, but now things are shifting. Here's a clip from Bloomberg. [Clip: Bloomberg on Frisco-area home prices] Chris Berg: Nine percent — home prices down 9% in a year. That's a stunning stat, especially when other areas of the country are fine. The suggested causation: a lot less immigration, thus less demand in those areas, so prices come down. That's the demand piece. Now — you could say it's all about mortgage rates, people stuck in their 3% rates and not moving, which is absolutely true. But you can also point to these demographic factors decreasing; they're not helping. I'm going to share a critical tool for measuring demand. If you're going to put $10, $20, $30 million into the ground as a developer, in my opinion — and this is what Warren Buffett always said — the three most important words in investing are "margin of safety." Whatever you can do to give yourself a margin of safety has a big impact on your ability to make mistakes and still get really good returns for your investors. First, the supply piece, which is easy to measure — everybody talks about supply. There's been a ton of supply come on, staggering numbers back to 2019. COVID happened, things dipped, but then everybody started moving, so you had a huge kick up in rates — stocks going up for Public and Extra Space — and a bunch of private capital going "these guys are making a ton of money, I'm jumping on the bandwagon." But as a developer, it takes a long time to get these out of the ground and leased up. So suddenly you've got record supply coming back on, people realize there was way too much supply, and now it's dropped off — precipitously (third time I get to use that word). For example, on Ben Vestel's webinar, Liz Raun Schlesinger talked about looking at assets in New Hampshire — a town of about 5,000 people where somebody built a 100,000-square-foot self-storage asset. It makes zero sense; I don't know how they got a bank to finance it — maybe all cash. That asset is not going to perform well, unless you're solving for the developer fee. So the big question: I can go into cities, or use Radius or TractIQ, to understand how much supply is in a marketplace. But up until today, there's never been a formulaic way to measure demand. Put yourself in a Sam Zell mentality: the basic thesis of business is supply and demand, and you've got people putting $10, $20, $30 million into the ground with no real way to measure demand. When I was at the New York SSA, a great gentleman — Mr. Cohn, 38 years in the business, out of Pittsburgh — stood in front of the room and said: here's what I do for a margin of safety. Before I build, I ensure I've got a 3x demand quotient — three times the demand in that marketplace — before I put a shovel in the ground. Because I don't know who else is going to come build there. It may look good today, but others will see it's good, put shovels in the ground, and now I've got more supply I can't stop and can't defend against. So I need that margin of safety. The good news: this is a really simple formula. Is it the holy grail? No — but it's another metric for a greater margin of safety. What's awesome is we got it from the Self Storage Association Demand Study — literally a formula from the SSA demand study — and we added one factor, thanks to the gentleman from Pittsburgh talking about 3x demand. Here's how it works: per the SSA Demand Study, you take households × the usage rate (12.6% is the percentage of households using self-storage across the country — higher in some parts, lower in others, so it's not perfect) × 125 square feet (the average household's storage usage). That's total demand. Then you look at total supply in that marketplace (current plus pipeline). Total demand minus total supply is the unmet demand. For a margin of safety, divide that by your proposed net rentable square feet — and you want a 3x to build there. Let me show you with an example from our CRM. Go to storagedemandscore.com, put in the address where you're looking to buy or build. Say we're going to build 75,000 net rentable square feet. Thanks to TractIQ for powering this. I click the blue button — hopefully I've got enough API calls. The reason I'm showing you Pasadena: right now there's a moratorium in Pasadena, so none of us can build there anyway, which is exactly why you get this incredible demand score. If you could build in Pasadena, this is telling you there's absolutely enough demand for a strong margin of safety. How? Total households (74,000 via TractIQ) × 0.126 gives total demand. This is the supply in the market — nothing in the pipeline because of the moratorium. Total demand minus effective supply gives 281,000 square feet. Divide by what we're going to build (75,000) and you get 3.76 — a 3-plus margin of safety. So if three more people came in and said "I'm going to build 75,000 net rentable square feet," I still have the cushion to protect my asset and get good returns for my investors. Very simple: put in an address and net rentable square feet, hit the blue button, and it gives you a three-mile and five-mile demand score, showing exactly how it calculates. Here's why I built this tool: if you're going to put $10, $20, $30 million in the ground, you want as much data and as many metrics as you can to increase the probability of success. You never know what happens three or five years out, but this is a way to increase your margin of safety. We've talked about a lot of headwinds, and you're hearing a lot of people very bearish on the industry today. But what's the long-term thesis? Assume immigration changes (administrations change). Here's an actual tailwind: home builders are building smaller homes and apartments. Smaller homes mean a higher probability you'll need more storage. And this is the 2026 mid-year self-storage industry outlook from Public Storage — the utilization rate of storage has nearly doubled in the last 20 years. There's also a big conversation about small businesses using storage, so the utilization rate is absolutely going up, which bodes well long-term. So go to storagedemandscore.com, put in an address and what you want to build or buy, and get a demand score for your margin of safety within that community. I'd love your point of view — on the demographics we discussed, on demand, and on the tool. Are you bullish or bearish on our industry? I'm Chris Berg, this is the Self Storage Report. If you've got land in California or Arizona you think will work for storage, hit me up and I'll underwrite it and give you the Storage Demand Score. Subscribe to the channel to be the first to get this content — helping you build generational wealth in real estate. [END OF TRANSCRIPT]